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Is this going to be the turning point for the sensex? Will this be a firm support level for some time to come? Will the much talked about ‘Result Season’ bring the glorious days of the sensex back? Is this the right opportunity to enter the market again with ‘all guns blazing’? With uncertainty all around (high growth projections, high inflation, election fever etc.), that only time can tell. For the time being, we can only relish the good news as it comes and hope that the peaks are found again.

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Not Bad for $400 ?

Microsoft Corporation and HCL Infosystems on Friday announced a series of joint initiatives, including launch of world’s cheapest ultra portable laptop and setting up of centre of excellence, which will employ over 500 professionals.

Priced at Rs 16,990 (for Mileap X series), MiLeap brand of HCL laptops with Microsoft Windows XP Home operating system is the lowest priced among the MS operating system powered laptops, the company officials said. This laptop is powered by an Intel Celeron M processor (900 Mhz) on an Intel 915GMS chipset with a 512 MB DDR2 RAM. It comes with a 2GB solid state device as hard-disk. MiLeap X series of HCL Laptops is a fully functional series with a weight of 1.4 kg and 7” LCD running Linux with GUI.

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Economists fear the country is in for a period of high inflation even though it may start easing from the current level of 7.41 per cent to around 6.4 per cent from mid-May onwards. However, economists peg inflation’s yearly average (FY 09) at around 5.5 per cent, above the Reserve Bank’s comfort level of 5 per cent but considerably lower than the present level.

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Unfazed by the stock market volatility, leading financial institution Macquarie says 2008 could still turn out to be a great year for the Indian investors, who should stay put.

“India is now too important a market to ignore and we recommend investors to stay invested in the market. We think that 2008 has the possibility of being a great year for the Indian market,” Macquarie said in its first edition of Asia Equity Guide 2008.

The Sensex has slipped 4,000 points within a gap of two months taking global cues. Rise in crude prices, a fear of recession in the US and large-scale selling by FIIs had contributed to the fall.

“We believe that India will be in a sweet spot in 2008, with strong growth accompanied by falling interest rates. India is also a strong relative play on the global growth slowdown as it is relatively more immune than most other countries in Asia and earnings’ risk are isolated to certain sectors,” it said. Moreover, India is more isolated than other Asian countries with exports only 15 per cent of Gross Domestic Product (GDP).

Macquarie said that ahead of elections, scheduled in the first quarter of 2009, some sectors could be negatively affected by ‘election inertia’, at the same time, some sectors would benefit. “We believe that careful stock selection will make India an attractive market in which to hide from the global turmoil,” the report observed.

“We think the best play on the elections is the infrastructure and capital goods space, as the Government races to finish projects ahead of the pools. Our top picks in the country are, therefore, DLF, Reliance Communications, HDFC Ltd, Tata Steel and Reliance Industries,” it said.

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Inflation jumped to a 41-month high of 7.41 per cent on Friday, seen as a deadly blow to the government and fanning expectations of more monetary tightening that would hit economic growth. Inflation has climbed steeply in Asia’s third largest economy from a trough of 3.1 per cent in October and is far above the central bank’s tolerance level of five per cent.

Terming soaring inflation rate as a global phenomenon, the government on Friday said it has no “magic wand” to bring it down immediately though it is taking and will take all possible steps to contain price rise. “Inflation is at a very high level in all emerging markets such as China (8.7 per cent), Russia (11.9 per cent), Argentina (7.3 per cent) and Turkey (8.1 per cent),” Kapil Sibal said.

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IMF today projected that Indian economic growth rate would slip to 7.9 per cent in 2008 from 9.2 per cent in the previous year owing to the global turmoil. In 2009, the Indian economy will expand at slightly higher rate of 8 per cent, stated IMF’s World Economic Outlook. In case of China, the GDP growth rate is expected to slip to 9.3 per cent from 11.4 per cent in 2007.

The report further said weak export demand and higher financing costs will dampen the growth of private investment, the key driver of growth. Continue Reading»

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Pharmaceutical major Ranbaxy Laboratories, which has been linked to a hostile takeover bid of Chennai-based Orchid Chemicals, today said the company does not believe in such practices. “As a company, we do not believe in hostile takeovers,” a company spokesperson said.

Solrex Pharma, reportedly a Ranbaxy promoter group firm, had acquired over 8 per cent stake in Orchid Chemicals through open market purchases. The Ranbaxy official also declined to confirm or deny if Solrex Pharma is a part of the Ranbaxy Group.

Yesterday, a top Orchid Chemical official confirmed that Ranbaxy has acquired further stake in the company, but declined to give further details or on whether any meeting was held between the two companies.

“Ranbaxy has acquired around five per cent stake in the company (but) we are not going to comment on anything that has been speculated about the acquisition of the company,” Orchid Chemicals & Pharmaceuticals Managing Director Kailasam Raghvendra Rao said.

Orchid’s shares traded at Rs 220.7 in afternoon, down by 8 per cent on the Bombay Stock Exchange. Meanwhile, Ranbaxy shares also down by 8.6 per cent at Rs 462.15.

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US Electronics giant Advanced Micro Devices (AMD), which also has offices in India, announced on Tuesday that it will cut 10 per cent of its global payroll or over 1,600 jobs, because of deteriorating business conditions.

AMD, the second largest American chipmaker which has been facing problems largely because of a resurgent Intel, will begin reducing its workforce this month and the process is expected to be completed by the end of September. AMD expects to report revenue of USD 1.5 billion, down 15 per cent from the last quarter. AMD said that the revenue drop was caused by lower-than-expected sales across all business segments. The decline was more than expected.

However, details regarding the locations of job-cuts by the company, which has offices at Mumbai, Bangalore and New Delhi, were not given.

The reduction will be “global and will span all groups and all levels within the company and be based on business needs,” AMD spokesman Drew Prairie said.

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After months of mirroring the Wall Street (Indian markets going down with it), domestic markets ‘decoupled’ again this week from global markets (sadly, when the global markets were recovering). In the beginning of this year, the domestic markets were supposed to have ‘decoupled’ due to India’s high GDP growth trajectory. Continue Reading»

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Much to the fear and embarrassment of the UPA government, inflation rate almost doubled during the three months of 2008 to reach the 39-month high mark of 7 per cent. Although 2008 began with inflation rate of 3.79 per cent for week ended January 5, prices rose as the year progressed.

Such a sudden spurt in prices has thrown the household budget of the common man into disarray, putting pressure on the government and the Reserve Bank to take steps to control the inflationary pressure.

What is Inflation exactly?

Inflation is a measure of rise in general price levels of goods and services. Inflation is measured by taking a set of goods and services, and then the prices of the items in the set are compared to prices one time period ago.

In India, inflation is measured based on the wholesale price index (WPI) which measures the change in prices of a selection of goods at wholesale prices. Inflation is primarily of two types - Cost push and Demand pull. Cost push inflation is due to rise in costs of input materials or labour, whereas demand pull inflation is due to increase in demand beyond installed capacity.

Inflation comes in many varieties. The worst variety, from the viewpoint of politicians, is food-led inflation. In a poor country like India, where half or more of family spending is on food, rising food prices spell electoral doom.

Inflation went up quite a bit in the beginning of last year (around seven percent) due to high liquidity in the markets (huge funds inflows in the form of FII and FDI). The RBI controlled inflation by tightening the monetary policy (raising cash reserve ratio and interest rates) and letting the rupee appreciate against foreign currencies. Inflation came well within the control limits in the second half of last year. However, inflation is going up again this year from the last few weeks. This week, inflation figures reached the 7% mark. The reasons of rising inflation this time are quite different from those last year.

What are the effects of inflation?

Controlled inflation is good for the economy as it increases motivation levels of people. The government, in consultation with the RBI, decides the inflation threshold in the country (current inflation threshold range in India is 4-5 per cent). The inflation target is one of the key parameters that go into determining fiscal and monetary policies.

When inflation accelerates, as is the case today, governments across the globe tend to panic and rush out with anti-inflationary packages. The government is panic-stricken today because food prices are going through the roof. Overall, wholesale price inflation has accelerated from 4.5% in January to almost 7% today, and looks headed for double digits. Consumer prices are rising even faster because of consumer panic. The consumer price index is available only with a lag of two months, but newspaper reports suggest that in some cities the consumer price of rice is up 20%, edible oils 40%, dairy products 12% and some pulses 20%.

Life in the four metros across the country is getting tougher for poor and middle class consumers as their budget for grocery and other food items have shot up by almost 40 per cent in the last one year, with Delhi being worst hit. The maximum surge in food prices was witnessed in the national capital, followed by Kolkata, Mumbai and Chennai.

What are the main reasons behind rising inflation? Continue Reading»

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